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Irish savings hit another record high in July

Written by Robert McHugh, on 1st Sep 2020. Posted in Financial

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 New figures from the Central Bank show that deposits held in Irish financial institutions hit another record high in July as households and businesses continued to hoard additional cash. Private sector deposits rose by €4.3bn in July (+13% year on year). 

This took the cumulative increase since March to c.€19bn. Household deposits increased by 11% year on year (yoy) in July, with non-financial corporate deposits increased by 16% yoy. Household deposits now amount to €120bn, the vast majority of which is in on overnight deposit. 

Goodbody Stockbrokers say similar trends are being seen across Europe, highlighting that there are significant amounts of excess savings that could be used once economies open and consumer and business confidence returns.
 
Meanwhile, credit developments continued to weaken in July. Household credit grew by just 0.2% yoy, while non-financial corporate credit declined by 3.1% yoy. This is significantly weaker than the euro area average of +4.7% yoy in July. The biggest difference here is in the trends in non-financial corporate credit, where growth of 7.0% yoy was seen in the euro area in July.
 
Goodbody Stockbrokers say total spending recovered impressively from the lockdown period in April to the start of July but has flatlined since then. In the week to 24th August, total spending was 4% lower than pre-pandemic levels. The path of consumer spending from here will depend on the course of the virus and the government measures to control it.

According to Goodbody Stockbrokers, "As we have noted previously, Ireland has been slower at introducing credit guarantee schemes (CGS) relative to some other countries. The 80% CGS will be rolled out by the main Irish banks this week. We will be watching the take-up from this scheme closely."

Source: www.businessworld.ie

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